You Don’t Have to Buy That Car
As I was scrolling through Twitter yesterday, I stumbled upon a Tweet about the latest auto loan statistics. What I saw astounded me (but not really). It's unfortunately the way of the world, and I've long ago conceded we as a culture will continue to let vehicles steal our dreams and sabotage our finances. I sound dramatic, don't I? I'll share the numbers with you, then let you decide for yourself. In the third quarter of 2023, here are the metrics for the AVERAGE new car loan:
Loan Balance: $40,200
Monthly Payment: $726
Loan Term: 5.7 years
I remember the first time I saw a $1,000 car payment. It was shocking. These days, I see a new one nearly every week. I now regularly see $1,500 car payments. Yes, you read that correctly. $1,500/month for something we drive.
Most of the time, when the car payment elephant in the room comes up with a client or prospective client, there's a "but."
But…our last car broke down.
But…we needed something with fewer miles.
But…we needed something safer.
But...we needed something newer.
But…we needed something more reliable.
"But" is the gateway to a self-sabotaging financial decision. It's common to see families with $1,500-$2,000 of monthly car payments, while simultaneously feeling stuck and victimized by their lack of financial margin. The primary reason we get ourselves into this mess is using any number of reasons to justify what we already want to do.....and what we already want to do is have a sweet ride.
I have good news to share with you today. You don't have to buy that car. Nobody is holding a gun to our heads and forcing us to make significant life-altering financial decisions. Yes, we need transportation. But we don't need a vehicle corresponding to a massive monthly payment. I'd even take it a step further and argue we don't need a vehicle that requires any car payment whatsoever.
Sarah and I haven't had car payments for more than 14 years. It's not because we make so much money, but rather because we made a commitment to never again have a car payment. It's amazing how refusing to go into debt results in not having debt. However, this commitment requires us to make intentional decisions. You know, crazy, insane decisions like buying used cars with some miles, maintaining them, holding them for many years, and slowly saving for the next car along the way. I drive a car with 125,000 miles, and she drives one with 175,000 miles. They run well. They occasionally break. We fix them. Repeat. At some point in time, it will make sense to sell them, add money from our car sinking fund, and upgrade to newer vehicles with fewer miles.
Along the way, there are two realities we continually face:
Reality #1: Our car game isn't sexy. Far from it. It's kinda lame.
Reality #2: Our unsexy car game allows us to live a life full of flexibility, margin, generosity, impact, and meaning.
You don't have to buy that car.